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IRA

 

 


Traditional IRA

  • Deposits may be tax deductible, subject to IRS rules (consult your tax advisor)
  • Non deductible contributions are allowed
  • 2013 Contribution Limits are $5,500, with an additional $1,000 catch up contribution if you are over 50 (contribution limits subject to IRS restrictions)
  • Deposit can be made for the prior year up until April 15
  • All dividends and interest accrue on a tax deferred basis
  • Amounts withdrawn become taxable in the year they are withdrawn

Traditional IRA withdrawal restrictions

  • 10% IRS penalty if withdrawn before you reach the age of 59 ½ (certain exemptions apply)
  • You must start minimum distributions in the year you reach 70 ½

Upon separation from employment, 401k accounts can typically be rolled over into a traditional IRA account.  Existing IRA accounts may be moved (rollover or transfer of trustee) between financial institution subject to meeting certain requirements.

 

 

Roth IRA

  • Deposits are not tax deductible (consult your tax advisor)
  • 2013 Contribution Limits are $5,500, with an additional $1,000 catch up contribution if you are over 50 (Contribution limits subject to IRS restrictions)
  • Deposit can be made for the prior year up until April 15
  • Dividends and interest accrue tax free (not deferred), assuming the Roth IRA is not withdrawn before you reach 59 ½
  • There are no withdrawal requirements (70 ½ RMD) on a Roth, unlike a Traditional IRA

You may convert a Traditional IRA to a Roth IRA.  If you do, the amount converted would become taxable in the year that you make the conversion.

 

 

Coverdell Education Savings Accounts

 

An Education Savings Account (ESA) is used to pay for the future costs of a child’s education.  A qualified education expense include tuition, fees, books, supplies, equipment.

  • A maximum of $2,000 per year per child (beneficiary) is allowed subject to certain income limitations and IRS restrictions
  • Contributions are not tax deductible, although the interest and dividends earned are tax free

Am I allowed to change Beneficiaries?

 

Yes.  You may change a designated beneficiary on an ESA.  An example would be the current designated beneficiary has completed their education and there are funds still remaining in the ESA.  If you change the designated beneficiary, the new beneficiary must be a family member.

Interest Rates

IRA Calculators

 

 

 
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